Change Comes to Retail Food Industry in India

Most Indians have always bought their fruits and vegetables at the stall at the corner of the road, or the nice store that would deliver even a bunch of cilantro or a bunch of carrots to your home if you were in a fix. The supply chain that brought this produce to the market was haphazard at best. Now, all that is set to change, with the Indian government deciding to allow foreign investment in the retail sector, upto 51% for multi-brand retailers like Walmart and Carrefour. There will be various conditions that they will have to satisfy, such as a minimum amount invested in 5 years, support for rural infrastructure and jobs etc. How all these plans work out remains to be seen but the retail scene for food will change drastically. The new policy is expected to dampen inflation, bring in more efficiency and productivity and reduce wastage. Matthew Yglesias pointed out that it will probably result in the top 1% getting extremely rich but so along as the families around the median and the extremely vulnerable are not squeezed, the policy should be a positive one. I am not so sure ,mostly for the food sector. All the people involved in growing, transporting and bringing this food to the family table ( and they number in the millions)will be affected as this policy is put in place. In time, they may benefit but the initial impact will be hard. At a time when there is mounting hunger , malnutrition and concerns about the impact of climate change on agricultural productivity ( specially in South Asia), this new policy will add another variable to an already volatile situation. Caution and a long term perspective should be the way to go in this regard.

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